Before I got into sales, I had no idea what a sales engineer was, how they get paid, and what they need to do to get paid. I also thought that a SE and an Account Manager was the same thing. That was partly due to the fact that I only interacted with SEs in my previous role at Alcatel-Lucent, and they were the only ones who talked about quota.

Now that I’ve been a sales engineer for a few years, and I have friends who are curious about the job, I always get asked how do SEs and AMs get compensated? When I tell them, their next question is why do they get paid differently if they are both in sales. In this post, I will attempt to answer both questions based on my knowledge. I know there are many other sales professionals who have a different experience than me, so please feel free to chime in and help the masses who are interested.

Most professionals in the sales department of a technology-based company, who participate in pre-sales activities have a commission portion to their salary. Post-sales engineers, who may be part of the sales organization would not be paid commission. Also, everybody I know in a sales organization have a base salary. The salary/commission split or how and when the commission is paid off varies from company to another.

For SEs, the most common payment structure is 80/20. This means 80% is a base salary and it is a guaranteed salary. So if you are a SE and your sales team doesn’t sell a single dime’s worth of product, you would end up making this 80%. That is usually impossible to do, and if you manage to that, you can consider yourself unique.

The commission portion is 20%. As an example, if your commission is $20,000, and you sell 5% of your quota, you get paid $1,000 minus tax, pension plan, and other stuff you usually would pay the government. No, I’m not bitter.

It is possible that some SEs get paid with a 70/30 split or a 90/10 split, but I have not met anyone with this structure. If any of you fine folks reading this have a different experience, please confirm the structures that you are aware of. Which of these splits is better for the SE? That would be up to the SE’s risk tolerance. Also if you exceed your quota, having more at risk usually ends up in having a higher reward due to the accelerators which we will discuss in the next paragraph.

 In addition to the commission that SEs and AMs receive, most companies I know provide bonuses and higher payouts once you hit and exceed your quota. That’s the positive incentive you get for making it. The negative incentive for not making it is getting fired (oversimplification, I know). Once you hit your quota, you get a bonus of some percentage of your salary. As you exceed your quota, you may get paid at an accelerated percentage. For example, before you hit your quota, for every percent of quota you sell, you get paid the same percentage of your commission. So if you sold 1% of quota, you get paid 1% of your total commission. But after hitting quota, for every 1% of quota sold, you can get paid 1.5%, 2% or higher depending on the company compensation structure. Make sure you understand this before accepting am SE position.

 Salary ranges for SEs go from $80K base all the way to $160 base and possibly higher for those rare SEs that are indispensable. At least that is what I’ve seen from my conversations with other SEs. There may some other perks as well such as car allowance and car mileage payment. That will depend on the company.

 For AMs, the commission structures are usually 50/50, or 60/40 where 60 is the base. Same payouts will apply here for the AMs. The Account Managers salary go from the 60K base and I have not been able to find the upper limit.

 I know what you are going to ask me next. Actually, I don’t, but I hope you are asking, so who gets paid more?

 In 90% (fictional number, but you understand what I mean) of the cases, the Account Manager will get paid more. That’s where the second question that my friends ask to come in. Remember that one? The “why” question.

 He should get paid more, he has more at risk, and he is the one who is finding, in theory, the new logos (that’s sales talk to new customers), making the first contact, then working to close the deal. As SEs, we can talk all we want about how AMs cannot do anything without us, but we get to do the fun technical stuff and be viewed as a trusted adviser, but it is the AM who is trying to find new accounts to get into, then working closely with the customer to get the deal closed. Also if you compare a SE and an AM with the same seniority, the AM’s base is usually lower. So we have more of a guaranteed income, they have more upside.

I also have a theory which I’m pretty sure most people will not agree with. It is based on the law of diminishing returns. From what I’ve seen, an AM needs to work way more hours than an SE to be considered safe (close to quota). I’m not saying that SEs are not hard working. I have not seen a SE who does not average 10 to 15 hours over their full-time obligation. AMs need to average more than that to be able to make their quota. Also, most of that work is managerial work for their bosses to know what’s going on, and not work that leads to sales closed.  

 I’m going to do a mathematical comparison at this time, and since we are engineers, I will trust you won’t zone out. For this comparison, I’m going to assume that the SE and AM are both junior in their company. The SE’s salary is a total of $100K. So the SE base is $80K and $20K commission. The AM’s total salary is $120K since the AM’s on target earnings is usually higher. That would make his base $60K and a commission of $60K. I’m also going to assume a bonus of 0% if the quota is hit, but get paid double commission if they exceed the quota. So let’s take a look.

You will notice that at 50% of quota, the SE and the AM make the same amount, but beyond that, the AM takes off and really sees the benefit of the commission structure.

 Why don’t SEs want the same commission structure then? Well, because we are not in control. If you have that much money at risk, then you should be able to control who does what and when to win the deal. This is why most AMs I know are control freaks, and I mean it in the best way possible.

I’ve talked to many people, including recruiters like Stephen Shaffer, who talked about the different salary ranges that SEs can command. Check out my interview with Stephen here.

Also, the more skills you have the higher the salary you can get. Check out the Soft Skills for Great Sales Engineers